Study Business Failures
One of dozens of strategies listed and linked to here:
How to Make More Money
From Your Business
By Steve Gillman
What can you learn from looking at business failures? You
can learn what not to do, and that's a good start toward running
a better business of your own. Actually, when you see the volume
of errors and stupid policies in even successful businesses,
you start to realize that as easy as it is to make mistakes,
you have to make a whole lot to actually fail.
But what if you make fewer mistakes? What if you look at all
the marketing disasters, dumb policies and outright business
failures around you and use each to improve your own company?
That's a recipe for bigger profits.
I once watched a small two-person service business do $102,000
in sales their first year, yet make almost no profit. One of
their mistakes was over-spending on marketing and advertising,
without any clear way to measure the results. The lesson anyone
can apply: Find a way to measure the results of your advertising
and look specifically for mediums allow for measurement. For
more on how to do this see the page Measure
Advertising Results.
I have seen a number of businesses suffer or fail due to cash-flow
problems. Profits might be there, but because the owners did
not know how to manage the money as it came and went, they were
always in trouble. Look closely at the tragedy of a business
which is profitable yet fails, and you might get motivated to
make a plan to avoid a similar fate.
In particular you should look around for businesses which
are similar to yours and have either failed or are struggling.
If the failure already happened, invite the owner out to lunch
and get the story. Otherwise watch and ask around.
This isn't just about dumb mistakes either. As the owner of
a bookstore you might do well because of smart marketing that
wins customers away from other stores. But in looking at the
failures of other bookstores you might discover that the primary
problem they have is that fewer people are buying books, and
fewer are buying them from physical locations, preferring to
shop online. You could realize that as soon as you stop getting
the customers of failed stores because those stores are all gone,
your growth will stop too, and your sales too will start to fall
as the trend continues. It might be time to expand the coffee
shop part of your store, or to invest profits into something
else entirely.
There is a lot to learn from business failures, whether you
read about them in financial magazines or do some more relevant
research in your own town and own industry. Just be sure to use
what you learn.
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